Note 10 – Other Real Estate and Covered Other Real Estate

Other Real Estate, excluding Covered Other Real Estate

At December 31, 2016, Trustmark’s geographic other real estate distribution was concentrated primarily in its five key market regions: Alabama, Florida, Mississippi, Tennessee and Texas. The ultimate recovery of a substantial portion of the carrying amount of other real estate, excluding covered other real estate, is susceptible to changes in market conditions in these areas.

For the periods presented, changes and gains, net on other real estate, excluding covered other real estate, were as follows ($ in thousands):

	Years Ended December 31,
	2016			2015			2014
Balance at beginning of period	$	77,177		$	92,509		$	106,539
Additions (1)		24,348			33,396			37,428
Disposals		(35,075	)		(45,826	)		(43,802	)
Write-downs		(4,399	)		(2,902	)		(7,656	)
Balance at end of period	$	62,051		$	77,177		$	92,509

Gain, net on the sale of other real estate included in other real estate expense	$	6,151		$	3,995		$	3,697

(1)	For the year ended December 31, 2016, additions to other real estate included $388 thousand of other real estate transferred from covered other real estate as a result of the expiration of the related loss share agreement with the FDIC on June 30, 2016.

At December 31, 2016 and 2015, other real estate, excluding covered other real estate, by type of property consisted of the following ($ in thousands):

	December 31,
	2016		2015
Construction, land development and other land properties	$	36,871	$	47,550
1-4 family residential properties		7,926		10,732
Nonfarm, nonresidential properties		16,817		16,717
Other real estate properties		437		2,178
Total other real estate, excluding covered other real estate	$	62,051	$	77,177

At December 31, 2016 and 2015, other real estate, excluding covered other real estate, by geographic location consisted of the following ($ in thousands):

	December 31,
	2016		2015
Alabama	$	15,989	$	21,578
Florida		22,582		29,579
Mississippi (1)		15,646		14,312
Tennessee (2)		6,183		9,974
Texas		1,651		1,734
Total other real estate, excluding covered other real estate	$	62,051	$	77,177

(1)	Mississippi includes Central and Southern Mississippi Regions

(2)	Tennessee includes Memphis, Tennessee and Northern Mississippi Regions

Covered Other Real Estate

On July 1, 2016, $388 thousand of covered other real estate was transferred to other real estate, excluding covered other real estate, as a result of the expiration of the related loss-share agreement with the FDIC on June 30, 2016. As of December 31, 2016, Trustmark had no covered other real estate. The remaining loss-share agreement with the FDIC, which covers acquired covered loans secured by 1-4 family residential property, will expire in 2021. Should a loan covered by the remaining loss-share agreement be foreclosed, the related property will be classified as covered other real estate.

For the periods presented, changes and gains, net on covered other real estate were as follows ($ in thousands):

	Years Ended December 31,
	2016			2015			2014
Balance at beginning of period	$	1,651		$	6,060		$	5,108
Transfers from covered loans		503			266			2,851
FASB ASC 310-30 adjustment for the residual recorded investment		62			(880	)		136
Net transfers from covered loans		565			(614	)		2,987
Disposals		(1,726	)		(2,526	)		(1,232	)
Transfers to noncovered other real estate		(388	)		—			—
Write-downs		(102	)		(1,269	)		(803	)
Balance at end of period	$	—		$	1,651		$	6,060

Gain, net on the sale of covered other real estate included in other real estate expenses	$	880		$	46		$	24

At December 31, 2016 and 2015, covered other real estate by type of property consisted of the following ($ in thousands):

	December 31,
	2016		2015
Construction, land development and other land properties	$	—	$	638
1-4 family residential properties		—		223
Nonfarm, nonresidential properties		—		399
Other real estate properties		—		391
Total covered other real estate	$	—	$	1,651